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Wednesday, March 12, 2014

Another nail in the Scottish independence case

The continuing controversy over the increasingly unsustainable independence proposals being put forward by the SNP Government in Scotland have been set alight again today with an unlikely intervention from one of the World's leading businessmen, George Soros.

The Telegraph reports that Mr. Soros believes that Alex Salmond's proposal for an independent Scotland to share the pound is impossible. He has also warned that starting a new currency would be "potentially dangerous" as speculators would sense weakness and launch attacks.

The paper suggests that his comments undermine the leading currency options for an independent Scotland, raising the possibility of the country joining the Euro after a Yes vote in the Sept 18 referendum:

The First Minister insists that Scotland will keep the pound in a currency union after independence, adding that Westminster will agree to the deal because it is in the best interests of British business.

However George Osborne, the Chancellor, and his opposite numbers in Labour and the Liberal Democrats have categorically ruled out formally sharing the pound because it would be unstable economically and unpalatable to the electorate.

Mr Soros appeared to endorse the latter position on Wednesday during an appearance at the European Council on Foreign Relations in London.

He said: "Scotland wants to remain a part of the [pound] sterling and Britain is creating obstructions to that. It would be a very difficult relationship and I don't think that Scotland becoming independent and yet remaining part of the sterling is actually possible."

The 83-year-old also said creating a new currency would be "very inefficient and potentially dangerous" because its weakness could trigger attacks on the open market.

His comments suggest three of the four currency options for an independent Scotland - joining a currency union, staring a new currency or keeping the pound unilaterally - could not work economically.

That would leave Scotland having to adopt the Euro - a reality that could face public opposition given the financial meltdown that swept through the eurozone in recent years.

Coming from a world leading expert on currency these are views that need to bee taken very seriously.

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